Consumer Bureau, Secondary Market Overshadow Meeting

LAS VEGAS — While the first day of the American Credit Union Mortgage Association’s 16th annual conference featured optimism about credit union housing finance amid an uncertain economy, the second day was overshadowed by concerns about regulatory changes and secondary-market uncertainty.

The Consumer Financial Protection Bureau was the source of most of the regulatory anxiety, with many housing finance executives expressing real concern about the agency’s regulatory changes.

“It doesn’t seem like they really understand what credit unions do and why,” said one executive from Texas who declined to be named, citing his credit union’s media policy. “But these regulations are going add time and expense to every mortgage we write.”

The looming problem of what to do about the reform of the secondary-mortgage market was the second source of concern. Several speakers indicated that the only thing certain about the reforms of the two government-owned FannieMae and Freddie Mac is that they would not be allowed to remain the same.

Given the ongoing worries about CFPB regulations and their associated costs, when three leading credit union executives with years of legal and lobbying experience appeared on a breakout panel to discuss legislative and regulatory issues, the room was packed.

Steven Eisenberg, general counsel for the 1.1 million-member $15 billion Pentagon Federal Credit Union; John McKechnie, senior vice president of Total Spectrum and former executive with both NCUA and CUNA; and Larry Blanchard, a retired former lobbyist with CUNA Mutual, made up the panel.

Each shared perspectives on the CFPB and the future challenges in the secondary- mortgage market that ranged from generally pessimistic to very pessimistic.

Eisenberg praised people who he knew worked at the CFPB and who he had come to know from a joint project that Pentagon has with the agency to develop a prototype credit card disclosure statement. But he emphasized that the agency staff considered themselves to be working for consumers alone with little regard to other concerns.

“The people at the CFBP are intelligent, professional and very goodhearted,” Eisenberg told the executives. “But they take the agency’s unofficial motto of ‘know before you owe’ very seriously and only consider the consumer. It’s not about you for them, it’s about the consumer,” he said.

If the single-minded focus meant that many smaller credit unions and community banks may have to get out the housing finance business because they can’t afford to meet the compliance costs, he doubted the agency would care.

McKechnie urged credit unions approaching the CFPB with concerns about regulations to never approach with only a complaint, but instead to always have an option ready to suggest. “It’s always better to be able to say, ‘you want to attain this goal, have you considered this approach or this strategy,’ he said.

He also urged the executives to get involved directly, saying that lobbying from the men and women who must daily work under the burden of a regulation carried more weight with regulators than testimony or letters from CEOs, lawyers or lobbyists.

Blanchard agreed, noting that both regulators and legislators loved hearing from people who had direct organizational experience of a given problem or regulation.

On secondary-market reform, Blanchard urged credit unions to organize themselves to come to a determination of what it is they want to make sure they preserve in the reform.

“If we can organize and come together we can bring some real weight to the discussion,” Blanchard said, “but if they can pick us off one by one, that’s what they are going to do,” he added.

McKechnie agreed, saying that credit unions needed to put a premium on being part of the discussion and recalling a favored saying about lobbying, “If you don’t have a place at the table, you’re on the menu.”

Eisenberg said that his years of observation of political and regulatory lobbying efforts had led him to believe the most effective lobbying efforts were personal and face to face and had staff in Washington to help prepared the ground before lobbying meetings.